How Cable Companies Use Hidden Fees to Raise Prices and

Jonathan Schwantes, Consumer Reports

October 2019

How Cable Companies Use

Hidden Fees to Raise Prices and

Disguise the True Cost of Service

CR CABLE BILL REPORT 2019

EXECUTIVE SUMMARY

From cable TV to online ticket vendors, utilities,

airlines or hotels, companies are piling on more

and more hidden fees that result in higher bills for

consumers. Overall, 85% of Americans say they

have encountered an unexpected or hidden fee

in the past two years for a service they had used,

according to a recent nationally representative

survey of 2,057 U.S. adults, conducted by

Consumer Reports (CR). And nearly two-thirds say

they are paying more now in surprise charges than

they did ﬁve years ago. For a typical family, these

fees can potentially add up to thousands of dollars

a year in extra costs, posing a big ﬁnancial strain,

CR found.

Consumers are clearly fed up. Nearly everyone

(96%) of those who reported having encountered

hidden or unexpected fees in an industry that we

asked about said fees are a real nuisance. Nowhere

is this more true than in the cable industry. The

CR survey found telecommunications providers

(which includes cable companies) are the worst

oender when it comes to charging unexpected

or hidden fees. What a cable company advertises

to a consumer as a monthly price for services, and

what the consumer actually ends up paying, can be

dramatically dierent.

What a cable company

advertises to a consumer

as a monthly price for

services, and what the

consumer actually ends up

paying, can be dramatically

dierent.

Consumers of cable TV and internet service are

facing a rise and proliferation of company-imposed

fees that are buried in the ﬁne print and aren’t

clearly disclosed. As opposed to taxes or charges

for optional services, these fees are items added

to a consumer’s monthly bill for things that are

nothing more than a cost of doing business. For

U.S. CONSUMERS

SAY THEY ARE

PAYING

NOW

IN SURPRISE CHARGES

THAN THEY DID

FIVE YEARS AGO

example, the Broadcast TV Fee is a non-optional

fee that cable companies claim helps recoup their

cost of obtaining programming from broadcasters.

However, providing local TV channels is one of the

most basic services that a cable company oers to

consumers, and is not an optional service.

This report exposes how the cable industry is using

the practice of hidden, sneaky fees to disguise the

true cost of cable service and increase revenue,

and how much those fees are costing consumers.

It then arms consumers and policymakers with

the information they need to help ﬁght back. An

analysis of nearly 800 cable bills collected from

consumers across the country shows that:

» Company-imposed fees, from Broadcast TV

and Regional Sports Fees to Set-Top Box

Rental Fees, add what amounts to a 24%

surcharge on top of the advertised price.

» On average, the cable industry generates

close to $450 per year per customer from

company-imposed fees, helping explain why

CR’s survey found that nearly six in 10 (59%)

Americans who encountered unexpected or

hidden telecom fees in the past two years say

the fees caused them to exceed their budgets.

» Based on the total number of U.S. cable

subscribers and our ﬁndings, cable companies

could be making an estimated $28 billion a

year from charging company-imposed fees.

» The average cable bill contains more than

a dozen line-item charges, including the

base package price, company-imposed fees,

regulatory fees, and taxes, creating a jumbled

environment ripe for consumer confusion.

The problem is growing worse and more expensive

because the cost of company-imposed fees

continues to escalate. For example, in 2015,

the nation’s largest cable company, Comcast

Corporation, charged consumers a $1-a-month

Regional Sports Fee and $1.50-a-month Broadcast

TV Fee, for a total of $2.50 per month. Those two

fees combined now cost Comcast customers

$18.25 a month. That represents a more than

600% increase in four years. Similarly, Charter

Communications raised the price of its Broadcast

TV Surcharge three times in just the last year,

meaning its Broadcast TV Surcharge now costs

consumers $13.50 a month, a 50% increase of what

that fee cost a year ago—and far more than the $1

it was when ﬁrst introduced in 2010.

SOURCE: Jon Brodkin, Comcast Raises Cable TV Bills Again

- Even if You’re Under Contract, ArsTechnica (Nov. 26, 2018),

available at: https://arstechnica.com/tech-policy/2018/11/

comcasts-controversial-tv-and-sports-fees-rise-again-hit-18-

25-a-month/

Company-imposed fees

add what amounts to a

24% surcharge

on top of the advertised price.

On average, the cable

industry generates close to

$450 per year

per customer from

company-imposed fees.

Cable companies could

be making an estimated

$28 billion a year

from charging company-imposed fees.

Comcast’s Broadcast and

Regional Sports Fees (2015-2019)

630% increase

in just 4 years.

2015 2019

$10

$15

$20

$2.50

$18.25

How can the cable industry get away with doing

this? Believe it or not, the practice is legal. But

in order to charge fees in this manner, cable

companies have a legal responsibility to disclose

these fees without being deceptive. That is, they

need to be transparent with consumers.

However, the ﬁndings in this report suggest that

cable companies fail to do so in a consistent

manner. This report also documents confusing and

inaccurate statements made by cable company

representatives to CR researchers and consumers.

For example, on more than one occasion, company-

imposed fees were inaccurately described as

government charges.

Three steps are required to relieve consumers of

company-imposed fees that are confusing and

harming consumers:

1. New rules: All mandatory company-imposed

fees must be included in the advertised

price. A version of this plain and simple ﬁx

was applied to the airline industry in 2011 in

the form of the Full Fare Advertising Rule,

and would inject real transparency to cable

billing practices in the same fashion. A bill

currently pending before Congress, the TRUE

Fees Act, would do just that. The Federal

Communications Commission also has the

authority to eliminate itemized, company-

imposed fees in the cable industry directly

through a rulemaking.

2. Enforce existing laws: A series of

investigations and lawsuits against Comcast

by state attorneys general have alleged

hidden fees are a deceptive billing practice

that causes consumer confusion and harm.

More state attorneys general can and should

use the power of their consumer protection

statutes to police whether hidden fees are

harming consumers.

3. Consumer action: Fee-exhausted consumers

can cut the cord to avoid most company-

imposed fees. However, as this report also

notes, hidden fees are starting to creep into

“internet-only” service packages as well.

It is long past time for the practice of hidden

fees to end when it comes to cable companies.

Congress and the FCC have the power and

ability to rid company-imposed fees from the

marketplace. The growing cost and consumer harm

caused by those fees is documented in detail in this

report. In light of these facts, policymakers should

act to protect consumers and restore common

sense to the monthly cable bill.

Charter’s Broadcast TV Surcharge Increase (2018-2019)

Three times in the last year.

Oct. 2018 Nov. 2018 Mar. 2019 Oct. 2019

$12

$15

$8.85

$9.95

$11.99

$13.50

SOURCE: Jon Brodkin, Charter Raises Sneaky ‘Broadcast TV’ Fee for Second Time In Four Months, ArsTechnica (Feb. 6, 2019),

https://arstechnica.com/information-technology/2019/02/charter-raises-sneaky-broadcast-tv-fee-for-second-time-in-four-months/.

See also Luke Bouma, Spectrum is Raising its TV & Internet Pricing (The Third Price Hike on Broadcast TV in 12 Months), Cord Cutter

News (Sep. 7, 2019), https://www.cordcuttersnews.com/spectrum-is-raising-its-tv-internet-pricing-including-the-3rd-price-hike-on-

broadcast-tv-in-12-months/

Table of Contents

1. Introduction ...................................................................................................................................................................... 1

2. Understanding the Monthly Cable Bill ................................................................................................................. 3

3. Analysis ..............................................................................................................................................................................6

3.1 Consumer Cable Bills: The What and How Much ........................................................................................ 6

3.2 Cable Industry Explanations: The Why .......................................................................................................... 9

3.3 Testing the Cable Industry’s Explanations: What’s Happening in the Real World ...................... 10

4. Conclusions: Cable Company-Imposed Fees Are Less Than Transparent,

and Getting Worse ...................................................................................................................................................... 14

4.1 Company-Imposed Fees Consistently Fail Transparency Tests ............................................................14

4.2 The Problem Is Getting Worse .........................................................................................................................16

5. Policy Recommendations for Eliminating Company-Imposed Cable Fees ....................................... 18

Appendix A: Methodology .............................................................................................................................................22

Appendix B: CR Letter to Pay-TV CEOs and Responses ................................................................................... 23

References ........................................................................................................................................................................... 45

List of Tables and Figures

Table 1. Descriptions of Company-Imposed Fees ..............................................................................................4

Figure A: Cost of Cable Fees in an Average Monthly Cable Bill .................................................................. 7

Figure B: Mixing Company-Imposed Fees with Taxes ..................................................................................... 8

1. Introduction

Imagine your surprise if you were to learn in the

supermarket check-out line that the box of cereal

you wanted to buy was going to incur a Cardboard

Box Surcharge and a Grain Reﬁnery Fee, adding

nearly 25% to the purchase price. It sounds

absurd—but actually isn’t very dierent from what

many consumers experience month-in, month-out,

when they pay their cable bills.

The pay-TV industry has frustrated and

disappointed consumers for years, and it’s

not surprising that companies across the

telecommunications industry remain some of

the lowest-rated service providers in Consumer

Reports’ (CR) annual member surveys.

A lack of

strong, head-to-head competition in the cable

marketplace has led to steady price increases

that have far outpaced inﬂation for decades.

And

notoriously poor customer service has added an

additional layer of frustration.

And yet, in at least one important respect, the

situation has recently gotten much worse: in the

past decade, cable companies have begun to

impose new fees for services previously included

in the base rates that are typically quoted in

advertisements. Our analysis of hundreds of pay-

TV bills submitted to CR by consumers reveals that

company-imposed charges—which, to be clear, are

separate and apart from charges related to any

government-imposed fees and taxes—now add

almost 25% of the base price to the typical monthly

cable bill.

Unsurprisingly, consumers get frustrated and

angry when they discover these company-imposed

fees on their bills. A recent Consumer Reports

nationally representative survey of 2,057 U.S.

adults asked about add-on fees across many

industries, and found that nearly seven in 10

(69%) Americans who have used a cable, internet,

or phone service provider in the past two years

reported encountering unexpected or hidden

fees.

And nearly all—96%—of those who reported

having encountered hidden or unexpected fees

in an industry that we asked about said they ﬁnd

them annoying. Two-thirds—64%—called them

“extremely” or “very” annoying.

The depth of that frustration reﬂects the insidious

market eect of company-imposed fees: they

enable cable companies to camouﬂage price

increases, confounding consumer eorts to

comparison shop and to maintain household

budgets. This happens in at least two ways. First,

the fees are often imposed or increased with little

notice, and are often listed among a dizzying array

of other charges, including government-imposed

fees and taxes. Second, by passing along additional

costs as “fees” and not building them into the

core package price, cable companies are able to

continue advertising relatively low base rates. Thus,

they can generate more revenue each month with

little pushback from their customers—including

even those who are locked into ﬁxed-price

promotional oers.

The combined eect is stretching consumer

pocketbooks to the breaking point. CR’s survey

found that the telecom industry (which includes

cable companies) was the worst budget-buster of

the ones we asked about. Nearly six in 10 (59%)

Americans who encountered unexpected or hidden

fees while using telecom services in the past two

years say the fees caused them to exceed their

budgets.

Paying for TV and internet service in the 21st

century should not be this fraught with frustration.

But the problem is hardly conﬁned to the cable

industry. Airline passengers now routinely pay

an extra fee to bring luggage on their trip, or to

secure an assigned seat; hotel “resort fees” are

proliferating, even at properties that oer little

more than a place to sleep; and buying tickets

to a cultural or sporting event is nearly always

accompanied by a non-optional service fee.

The common thread of these fees is a nominal

attachment to services that, not long ago, were

presumptively included in the base price. And

as in the pay-TV industry, this practice obscures

the true price of goods and services, rendering

comparison shopping and budgeting a challenge,

and sometimes impossible.

In response to this burgeoning wave of hidden,

unfair, and excessive company-imposed fees

across industries—which we’ve dubbed The Fee

Economy—Consumer Reports launched the What

the Fee?! campaign in 2018 with the aim of shining

a bright light on these practices and, ultimately,

ridding the marketplace of them altogether.

This report is the result of our eorts to better

understand the problem in the pay-TV industry

speciﬁcally, and to formulate proposed solutions to

better rein in fees or abolish them altogether.

2. Understanding the Monthly

Cable Bill

For many years cable bills included a base package

price, state and local taxes, and a few government-

imposed regulatory fees that operators were

allowed, but not required, to pass on to

consumers.

Most cable companies also charged a

rental fee for the set-top box necessary to receive

service. Cable bills may have been expensive,

but they were relatively straightforward and

transparent. The price that customers were billed

largely reﬂected the advertised price.

That changed about 10 years ago, when cable

companies began to disaggregate their rates by

charging a base rate plus a range of new line-

item fees that go by terms such as Broadcast TV

Fee, Regional Sports Surcharge, HD Technology

Fee, and Network Access and Maintenance Fee.

The exact assortment of fees varies by cable

company, but in general they are company-

imposed and purportedly meant to cover features

or services that had previously been included in

the base advertised price. By 2015 the practice

had spread throughout the industry.

And by 2017,

the Federal Communications Commission (FCC)

had recognized the practice of splitting fees out

from the base package as a “strategy” that “raises

monthly bills while typically leaving the advertised

prices for video packages unchanged.”

Meanwhile, the dollar amount of company-

imposed fees has skyrocketed. For example,

when Charter Communications (which brands its

cable TV and internet service as Spectrum) ﬁrst

began charging a Broadcast TV Surcharge in 2010,

it cost consumers $1 a month.

More recently,

the company raised that fee three times since

November 2018, ﬁrst from $8.85 a month to $9.95,

and then to $11.99 a month in March 2019—a 35%

price increase in less than three months.

Incredibly,

Charter just announced another increase of this

company-imposed fee, raising its Broadcast TV

Surcharge to $13.50 a month, a 50% increase of

what it cost a year ago.

All told, that’s a 1250%

increase of that fee since 2010.

Especially notable is the fact that these fees are

being raised by cable companies even while many

consumers are locked into supposed “ﬁxed-rate”

contracts. Unusually careful consumers with a lot

of time on their hands can discover (in the ﬁne

print) that although the advertised package price

is locked in for a year or two, various company-

imposed fees (like the Broadcast TV Fee) are

permitted to be increased by unspeciﬁed amounts.

For the purposes of this study, we’re mostly

concerned with the imposition and increase of

company-imposed fees—that is, as described

above, those fees that are charged at the discretion

of the cable provider, and not at the insistence of

governments or regulators.

Especially notable is the

fact that these fees are

being raised by cable

companies even while many

consumers are locked into

supposed “ﬁxed-rate”

contracts.

The following table lists the most commonly-charged company-imposed fees with a brief description of

each.

Table 1. Descriptions of Company-Imposed Fees

Name Description

Broadcast TV Fee

Cable companies claim this fee is charged to recoup their costs for

obtaining permission, known as “retransmission consent,” to deliver local

broadcast channels such as ABC, CBS, Fox, and NBC to subscribers. Most

cable providers charge this fee and it is mandatory.

Regional Sports Fee

Cable companies claim this fee is charged to recover a cable company’s

costs for obtaining sports programming, and it is charged by most cable

companies.

Set-Top Box and Related

Rental Fees

Fees charged for renting a set-top box, a digital video recorder (DVR),

and related equipment necessary to receive service. These fees were

among the ﬁrst widespread company-imposed fees.

Cable Modem and/or Router

Fees

Fees assessed for renting cable modems and wireless routers necessary

for installing a home WiFi network. In some markets, consumers can avoid

this fee if they buy and use their own equipment.

HD Technology Fee

A fee charged to unlock the high-deﬁnition (HD) capability of a set-top

box, necessary to view channels in HD. A fee unique to Comcast.

Internet Service-Related Fees

Relatively new fees that cable companies claim support the upkeep of

a provider’s broadband internet network. Examples include Frontier’s

Internet Infrastructure Surcharge and RCN’s Network Access and

Maintenance Fee, both of which are mandatory.

Administrative/Convenience

Fees

Fees for miscellaneous (and often unspeciﬁed) services.

Installation Fees

One-time installation charges, which are sometimes waived as part of a

promotional oer.

Of course, cable bills contain fees other than company-imposed fees. Additional fees in a typical cable bill

include government fees and taxes, premium service charges, and other miscellaneous charges.

Government-Related Fees and Taxes

The 1992 Cable Act allows cable companies

to separately itemize government taxes and

regulatory fees and pass them on to consumers.

Examples include federal, state and local sales

taxes, local franchise fees, and other regulatory

fees (e.g. Universal Service Fund fees, E-911 support

fees, and PEG channel fees). A worthy distinction

can be made between taxes, like sales taxes, that

the provider is eectively collecting on behalf

of the government, and other fees that are best

characterized as “regulatory pass-through fees.”

The latter are typically being charged to the cable

providers, who are then choosing to pass those

fees on to consumers. The practice, though legal,

is somewhat akin to asking consumers to pay the

company’s corporate taxes. But at least these fees

are a deﬁnable cost that can be veriﬁed, unlike

company-imposed fees.

Premium Services

These are charges that consumers agree to pay

for premium channels such as HBO and Showtime,

and other optional features or services that provide

value above and beyond the base package of

service, including fees for home security services,

pay-per-view movies, and service protection

plans. Because these fees are optional charges for

upgrades consumers voluntarily choose to pay for,

we do not object to them being charged separately.

Miscellaneous Charges

Finally, some bills include miscellaneous line-

item charges related to price adjustments for

underpaying or overpaying a previous month’s bill

(usually the result of a package change).

Base Package Price

In our analysis, after all the fees and other line-

item charges were accounted for, we considered

the remainder to be the base package price of the

service. In some cases, the base package price

covers cable TV service only; in others, it includes

internet and/or phone service as well.

3. Analysis

Research for this report consisted of ﬁve

concurrent eorts aimed at collecting data

that would allow us to better understand the

various types and sizes of fees charged by pay-

TV companies, and why they are being charged.

First, we asked consumers to share copies of

their monthly bills with Consumer Reports in

order to both identify the number and type of

add-on fees and calculate their cost. Second, we

contacted more than ten pay-TV providers and

asked them to explain how and why they charge

company-imposed fees. Finally, we compared

company explanations to how consumers actually

experience add-on fees, by conducting a “secret-

shopper” investigation, in which anonymous,

CR-commissioned callers spoke with cable

company customer service representatives; by

studying lawsuits in which cable companies had

been accused of failing to properly disclose their

fees; and by asking consumers to share their own

experiences of how fees were explained to them by

their cable companies.

3.1 Consumer Cable Bills: The What and

How Much

In June of 2018, we asked consumers via email to

share their cable bills with us as part of our What

the Fee?! (WTF?!) campaign. More than 5,000

people responded; 952 bills submitted between

June and August of 2018 were ultimately examined

for this report which reﬂects the state of the

industry at that time. In determining which ones to

study, we randomly selected bills from all the bills

we received, with an eort to select more bills from

the companies with more subscribers. We also

included a sample from other operators, as well as

a few bills from smaller companies. Incomplete bills

were disregarded, as were multiple monthly bills

submitted by the same consumer.

In order to maintain an apples-to-apples

comparison between providers, we also separated

out satellite TV bills. This is because direct

broadcast satellite (DBS) companies do not charge

the same sort or number of mandatory company-

imposed fees as cable companies do. Nonetheless,

we found that company-imposed fees add, on

average, an extra $29 to the base package price

for satellite TV service, fueled in large part by

equipment fees for set-top boxes. So the problem

of excessive and expensive pay-TV fees is not

exclusive to the cable industry.

A total of 787 cable bills from 13 companies were

left to analyze.

We catalogued all fees appearing

on those bills, paying special attention to company-

imposed fees, and then calculated how much

various fee categories were costing consumers,

both as an average dollar amount and as an

average percentage of the overall bill.

Some, though not all, cable bills included line-

items for discounts. The type of discounts varied

and usually represented a “bundle discount” that

appears to represent savings to consumers when

they subscribe to a bundled package of services

(e.g., a cable TV and internet package).

Because

discounts were not applied to all consumers in a

consistent or uniform fashion, or they expired at

the end of a limited-term promotional oer (at

which point the “regular rate” is applied) we did

not calculate them into our ﬁnal results. When

consumers are required to purchase a more

expensive bundle, haggle with a customer service

representative, or shop for a new promotional

package once their original deal has expired,

the acquisition of a discount requires action by

consumers, and therefore cannot reliably be said to

consistently or predictably lower the overall price

for service.

The following represents our most signiﬁcant

ﬁndings.

Company-imposed fees add 24% of the base

package price to the average monthly cable

bill.

The average cable bill in our study costs consumers

$217.42 a month. Of this number, a little less than

$157 on average was determined to be the base

package price once all fees, taxes, and charges for

premium services were subtracted from the total

price. In other words, the average consumer pays

more than a 33% mark-up over the base price of

service because of add-on fees of all types.

Company-imposed fees comprise the largest

portion of this mark-up, costing consumers, on

average, more than $37 a month and adding an

extra 24% of the base price to the monthly bill.

The average amount of company-imposed fees

charged by speciﬁc providers, for example,

ranged from $22.96 for AT&T U-verse and $31.28

for Charter, to $39.59 for Comcast, $40.16 for

Cox, and $43.79 for Verizon Fios. These averages

reﬂect a snapshot of the marketplace in 2018

based on the monthly bills analyzed by CR from

consumers across the country, and are not meant

for comparison purposes.

Company-imposed fees in cable bills could be

costing consumers at least $28 billion a year.

To gain a better appreciation for just how much

money is being generated by company-imposed

fees for cable companies, we used the most recent

publicly available subscriber numbers published

by the FCC to determine the total number of

American cable consumers.

Combining the

subscriber numbers for all cable providers (e.g.,

Comcast, Charter, and others) with telephone

companies like Verizon Fios and Frontier

Communications that provide video service (whose

bills we treated the same as cable) generated a

total of 62,485,000 subscribers.

Multiplying the total subscriber number by the

average cost of company-imposed fees, $37.11 per

month, produces a ﬁgure of roughly $2.3 billion a

month—or a little less than $28 billion a year in fees

created by the cable industry. To be clear, that’s

the amount that providers could be pocketing,

separate from taxes, regulatory pass-through

fees (explained above), and optional charges for

premium services.

Company-imposed fees are growing in both

size and number.

In the time since we asked for consumers to share

their bills with us, at least three large pay-TV

companies have further increased their company-

imposed fees. Comcast increased its Broadcast

TV Fee by $2 and its Regional Sports Fee by $1.75

late last year.

AT&T raised the Broadcast TV Fee

COST

OF CABLE

FEES

IN AN

AVERAGE

MONTHLY

CABLE BILL

Base Package:

$156.71

Miscellaneous:

$1.17

Government Fees & Taxes:

$13.28

Company-Imposed Fees:

$37.11

Premium Services:

$9.15

All Companies Combined (N = 787 , Avg. Bill = $217.42)

Figure A details the individual cost that each fee category contributes to the overall monthly cable bill.

Figure A: Cost of Cable Fees in an Average Monthly Cable Bill (2018)

for its U-verse video service by $2 per month.

And as mentioned above, Charter bumped up

its Broadcast TV Surcharge three times since

November 2018, from $8.85 to $9.95, to $11.99, and

now to $13.50.

The rapid escalation of Charter’s

fee represents a more than 50% increase of what

that fee cost a year ago—and far more than the $1

it was when ﬁrst introduced in 2010.

To understand the forces pushing for these

increases, it is worth pausing to consider the

ﬁnancial impact of Charter’s three increases of

its Broadcast TV Surcharge in the past year. If

we multiply the additional $4.50 per month per

subscriber times the company’s almost 17 million

subscribers,

we see that Charter is able to collect

nearly an additional $918 million a year by simply

deciding to increase one company-imposed fee.

Our bill analysis also uncovered new company-

imposed fees being applied separately to

internet access service. Bills issued by Frontier

Communications during the time period we studied

contained a $2 Internet Infrastructure Surcharge,

and RCN bills included a $2 Network Access and

Maintenance fee. Both are mandatory. Adding new

company-imposed fees to the cost of internet

service is a disturbing new trend, and predicts

a future where even internet-only consumers—

including so-called cord-cutters, who generally

look to save money by dropping cable TV service

and relying only on internet service for their video

entertainment—will not be safe from the growing

burden of add-on fees.

New mandatory modem and router fees have also

begun to saddle more internet-only consumers

with company-imposed fees. Many consumers have

long been able to avoid monthly equipment rental

fees by purchasing and using their own modems

and routers. With rental fees costing up to $11 a

month, they can often recoup their investment

in less than a year.

But Frontier recently began

charging a leasing fee “for your Frontier router or

modem—whether you use it or not,” eliminating

this money saving strategy.

All this means that our estimate of how much

company-imposed fees could be costing

consumers—$28 billion per year—likely understates

the full scale of the problem.

The average cable bill analyzed contained

more than 13 line-item charges, sometimes

without clear distinctions between dierent

fee types.

On average, cable bills in our study contain more

than 13 separate line-item charges, which includes

all the fees outlined above, along with line-items for

the base package price.

This large number of line-item fees is, by itself,

likely to create confusion. Some cable companies

oer brief deﬁnitions for each of the fees, either

on the bill itself or on their websites. In any case,

the deﬁnitions do not necessarily distinguish

between company-imposed fees and, for example,

regulatory pass-through fees.

This problem is compounded when some

companies actually list company-imposed fees

under the same headings as—or even interspersed

with—regulatory pass-through fees and taxes.

For example, as seen in Figure B, Frontier

Communications lists its Internet Infrastructure

Surcharge—a company-imposed fee—under a

“Detail of Taxes and Other Charges” but does

not distinguish between taxes imposed by the

government and fees created by Frontier.

Figure B:

Mixing Company-Imposed Fees with Taxes

(A Frontier Communications Consumer Bill from 2018)

Similarly, Frontier and RCN oer a list of fee

explanations on their websites but do so under

the title “Taxes and Surcharges” (Frontier) or

“Understanding Taxes” (RCN) despite the fact that

company-imposed fees—the Internet Infrastructure

Surcharge (Frontier) and the Network Access and

Maintenance Fee (RCN)—are included.

Though

Frontier explains in the ﬁne print that its fee is not

a tax, RCN does not.

Such confusing descriptions raise serious questions

about how transparent cable companies are in their

fee-related disclosures.

3.2 Cable Industry Explanations: The Why

On May 18, 2018, Consumer Reports sent letters

to 11 major pay-TV companies, seeking to open

a dialogue regarding industry billing practices

and the importance of transparency in consumer

pricing.

We highlighted our concerns about

hidden fees, and urged all pay-TV providers to

include the full cost of service in the base price so

that consumers can eectively compare the prices

of dierent services and manage their household

budgets. Several companies did not respond.

Others, including Comcast, Charter, Verizon, and

Frontier, did.

The explanations and justiﬁcations of the

companies that responded can generally be

grouped into three categories.

First, most of the companies that responded

insisted that their billing practices were entirely

legal. Charter, for example, noted that, “The FCC

expressly permits cable video programming

providers to separately itemize their programming

costs on customer bills.”

Comcast made a similar

claim.

It is true that, in implementing the 1992

Cable Act, the FCC explicitly opened the door to

itemization of regulatory pass-through fees and

taxes, as well as company-imposed fees.

Second, cable companies claim that the fees

they add to bills are done so in a clear and

transparent manner. Indeed, state consumer

protection laws broadly require cable companies

to accurately, transparently, and truthfully disclose

fees.

Flagrant misrepresentation that deceives

consumers about fees can be prosecuted as a

fraudulent business practice. But in their responses

to our inquiries, the cable companies insist that

their billing practices, including the addition

of company-imposed fees, are transparent.

They maintain that consumers are given all the

information they need to make smart, well-

informed marketplace decisions.

Verizon, for example, wrote that its employees

“work hard to ensure that our pricing for our

Fios services is transparent to customers in our

advertisements and through our online and

phone-based sales channels.” Verizon also said

its customers have “the ability to review [fee-

related] information in writing,” and notes that its

advertisements disclose the existence of additional

taxes and fees. Before conﬁrming an order, the

company adds, all prospective customers can see

a full breakdown of the bundle costs, including

taxes and fees.

Comcast and Charter made similar

claims of transparency.

Third and ﬁnally, to further justify why company-

imposed fees are being charged, and more

speciﬁcally as to why these fees are increasing,

cable companies cited the rising cost of obtaining

programming content from local network aliates

and other broadcasters as a primary reason.

Though there is a kernel of truth in this explanation,

what is left unexplained is why these costs are

passed on to consumers in the form of fees and

not included in the base package price. And none

of the reponses adequately answered the question

of why cable companies were choosing to itemize

fees in the ﬁrst place.

Nonetheless, cable companies are indeed locked

in a battle with broadcast networks over the cost

of programming content. The struggle was set into

motion by the 1992 Cable Act, which required cable

companies to carry local broadcast channels in one

of two ways. A broadcaster may simply demand

carriage, and the cable company is obligated to

provide it under what is called the “must-carry”

rule.

Alternatively, when it is clear that the cable

company wants to carry the broadcast channel, a

broadcaster can negotiate carriage in exchange for

money—that is, the broadcaster grants the cable

company “retransmission consent” for a price, or a

retransmission consent fee.

Over the past 15 years broadcasters have

demanded higher retransmission consent fees for

their programming, and cable companies have had

little choice but to pay up. If the two parties cannot

negotiate a consent deal before the previous one

expires, a broadcaster can insist that its signal

be “blacked out.”

Though the number of station

blackouts in recent years has also risen, cable

companies have generally been unwilling to anger

their customers by letting a blackout continue for

too long in most cases, choosing instead to cut a

deal and then pass the costs on to their customers.

The dynamics of these negotiations can be

addressed in a way that would better beneﬁt

consumers, and we make two recommendations to

that eect in the ﬁnal section of this report.

3.3 Testing the Cable Industry’s

Explanations: What’s Happening in the

Real World

Our analysis continued with testing the cable

industry’s bold transparency claims. We did so in

three ways. First, CR employed a qualitative “secret

shopper” investigation, in which anonymous callers

posing as potential new customers contacted

customer service representatives (CSRs) of

Comcast, Charter, and other leading pay-TV

companies to discuss subscribing for new service;

second, we reviewed recent legal actions brought

by state attorneys general against Comcast for

less-than-transparent billing practices; and third,

CR enlisted current consumers of Charter to

complain about—and request an explanation for—

the recent increase of its Broadcast TV Surcharge.

Secret Shopper Investigation

In late 2018, seven secret shoppers made a total

of 74 calls to CSRs of Charter, Comcast, DIRECTV,

Frontier, and Verizon. Our shoppers posed as

potential new customers interested in obtaining

TV and internet service, and were provided a script

of questions and follow-up responses. Sample

questions and directions from the script included:

» Do you oer a bundled package that only

includes TV and internet service?

» If no bundled package is oered ask: What is

the combined price of TV and internet service?

» Are there any additional fees that’ll be added

to my monthly bill?

» If there are additional monthly fees, and you

have been told you have to pay those fees ask,

Why?

The secret shoppers were also asked to record

whether the CSR proactively shared information

on additional fees, or had to be pressed for that

information. We also encouraged our shoppers

to ask for pricing information and whether fees

were mandatory. All responses were recorded and

shared with CR.

This Secret Shopper investigation was designed

to determine a) how and when company-imposed

fees were disclosed, and b) how the representatives

explained and justiﬁed those fees—in particular,

whether company-imposed fees were properly

described as such and not as a tax or regulatory

pass-through fee.

We found that our shoppers were provided

inaccurate or confusing fee-related information

by the pay-TV company CSR on a number of

occasions. Examples include:

Inaccurately blaming the government for fees

» At least one CSR of every major provider that

our secret shoppers contacted misstated

that fees were mandated by the government,

without a clear distinction made between

company-imposed fees and regulatory pass-

through fees.

» When asked directly why consumers have

to pay the additional monthly fees, a few

CSRs portrayed the fees as mandated by the

government, again without distinguishing

between company-imposed fees and

regulatory pass-through fees.

Failing to mention fees

» Although half of the CSRs contacted (37 out of

74) acknowledged that additional fees would

apply to the base price, only 18 speciﬁcally

cited the Broadcast TV Fee or Regional Sports

Fee.

» Of the 20 times where additional fees were

said to apply but with no mention of the

Broadcast TV Fee or Regional Sports Fee,

CSRs oered incomplete fee information, if

any, with a reference to taxes or maybe one

or two other fees (e.g, equipment fees or

activation fees).

» Occasionally, CSRs proactively shared this

information on additional fees. However, more

often than not, our shoppers said they had to

ask about fees or coax details about additional

fees during their calls.

» Secret shoppers were asked to sign up for

service before the representative shared the

ﬁnal price, let alone additional fee information,

a total of nine times.

Though some CSRs oered our shoppers accurate

information about company-imposed fees, the

majority did not, and many calls resulted with

incomplete and/or inaccurate information oered

to would-be customers.

Legal Actions Against Comcast for Billing

Practices

Since 2016, state attorneys general in

Massachusetts, Minnesota and Washington have

each launched investigations and/or ﬁled lawsuits

accusing Comcast, the nation’s largest cable

company, of fee-related fraud. A more detailed look

at those legal actions follows.

Massachusetts

In November 2018, the Commonwealth of

Massachusetts reached a settlement with Comcast

over alleged violations of the Massachusetts

Consumer Protection Act.

Comcast was

accused of failing to disclose fees that increased

bills by up to 40% over advertised prices, and

charging customers early termination fees of

$240.

Comcast was also accused of deceptively

advertising that consumers could “lock in” their

prices, when the price of certain fees remained

subject to change.

Among the terms of the settlement, Comcast

denied any wrongdoing, but agreed to clearly and

conspicuously disclose, in close proximity to any

advertised price claim, that the price excludes fees

and taxes and whether the fees and taxes may

change during the course of any contract.

addition, television and audio advertisements must

disclose that fees are excluded from the advertised

price. Comcast agreed to maintain a publicly

available website that separately lists prices and

common fees and taxes.

The settlement also included forgiveness of certain

debts incurred by Comcast customers. Comcast

agreed to forgive debts incurred by more than

16,000 customers for early termination fees or the

involuntary termination of residential services.

addition, Comcast agreed to further pay $700,000

to provide restitution to 4,500 customers who

had involuntarily disconnected their residential

services or downgraded their residential services

and had paid an early termination fee to do so.

Finally, Comcast agreed to pay $250,000 to

the Commonwealth for the Attorney General to

distribute according to her discretion.

Minnesota

The attorney general of Minnesota ﬁled a similar

enforcement action in December 2018, accusing

Comcast of misrepresenting company-imposed

fees and the price of cable television packages,

charging consumers for products they did not

order, and failing to send the prepaid Visa cards

that customers had been promised as a sign-up

bonus.

Comcast was also accused of engaging in

deceptive conduct, false statements, and material

omissions about the total cost of service, and of

failing to disclose substantial additional fees, both

in door-to-door sales and in sales over the phone.

Speciﬁcally, Minnesota alleged that Comcast

enticed customers to “lock in your rate for 2 years,”

without disclosing that it might increase fees

during the time frame of the advertised package,

and that Comcast falsely told customers that the

company’s Regional Sports Network and Broadcast

TV Fees were mandated by the government and

beyond the control of Comcast.

Minnesota further alleged that Comcast has been

aware that its misrepresentations and material

omissions of fact have confused consumers,

and that the cable company was aware of its

“fraudulent practice of charging Minnesota

consumers for unauthorized services and

equipment that they never requested.”

The state

also noted that Comcast settled an investigation by

the FCC based upon similar consumer complaints

that “Comcast added services or equipment to

subscribers’ cable services without their knowledge

or permission.”

Minnesota is asking the court to rule that Comcast’s

actions were violations of Minnesota law, enjoin

Comcast from engaging in deceptive practices

or making false or misleading statements, award

restitution for any and all persons injured by

the unlawful practices, award civil penalties for

each separate violation, and award the state its

litigation costs.

The state is seeking refunds for all

customers who were harmed by Comcast’s alleged

violations of the state’s Prevention of Consumer

Fraud Act and Uniform Deceptive Trade Practices

Act.

Washington

Finally, the attorney general in Washington State

sued Comcast in 2016 for allegedly violating the

state’s Consumer Protection Act. The state claimed

that Comcast violated Washington’s Consumer

Protection Act tens of thousands of times by

signing customers up for a “service protection

plan” without consent, failing to disclose monthly

fees, and misrepresenting service coverage.

On June 6, 2019, a state judge ruled against

Comcast, ﬁnding that the cable company had

violated the Washington State law almost half a

million times by signing consumers up for the $6

per month protection plan without their consent, as

alleged by the state attorney general. Comcast was

assessed a $9.1 million penalty and ordered to pay

back aected consumers with interest.

Consumer-Led Research

In response to Charter’s two increases of its

Broadcast TV Surcharge in just three months earlier

this year—the company just increased this fee for

a third time in September—we enlisted via email

the help of the company’s customers and asked

them to contact Charter to demand an explanation.

Speciﬁcally, 285 consumers called Charter in early

February to voice their frustration caused by the

$3 fee hike, and to question why this fee was being

increased and charged in the ﬁrst place. They

shared their experience with us via a “reportback”

form. Our action was solely focused upon the

Broadcast TV Surcharge, a company-imposed fee

not to be confused with a regulatory pass-through

fee or tax.

Some of the answers given by Charter’s CSRs

were remarkably similar to those received by our

secret shoppers, and to the misrepresentations

alleged by the state lawsuits and investigations

aimed at Comcast. When asked by their actual

customers, more than a few Charter CSRs invoked

the government as the guilty party responsible

for raising the Broadcast TV Surcharge. Customer

reports of inaccurate responses included the

following:

» “They said this fee was forced on them by

the FCC as a required charge for broadcast

content.”

» “The representative told me that it’s the state

that sets the price for the broadcast channels. I

live in North Carolina.”

» “I was told that it was a federal law and that it

was not their responsibility.”

» “They indicated the fees are levied by the FCC

and they do not have any control.”

» “Fee hikes a result of government increases in

charges for licensing.”

Several consumers were told that the broadcast

networks were to blame and that Charter was just

passing along those costs. But, the manner in which

Charter made this excuse gave the impression that

it was not responsible for charging this company-

imposed fee; rather, that Charter was merely

passing along a cost. For example, a consumer in

Ithaca, New York, characterized Charter’s response

as follows: “[Charter] said they were just passing

down fees from the network and they had no

control over it.” Over and over again, customers

were given this excuse, including:

» “The local channels have increased their fees

to Spectrum (Charter) cable nationwide and

there is nothing they can do about it.”

» “Stations raised their price, Spectrum (Charter)

had no choice but to raise ours.”

» “They said that it was beyond their control as

the local stations are imposing the increase.”

» “She told me it was the local stations that were

passing the fee on to them since they are the

billing people.”

None of those explanations made clear that

Charter, like other cable companies, is choosing

to charge consumers a separate Broadcast TV

Surcharge. Perhaps that was the most signiﬁcant

ﬁnding, especially when considering the

overwhelming response from Charter’s CSRs was

some version of there was nothing they could do

and that Charter was more or less forced to charge

this fee.

“They (Charter) said this

fee was forced on them

by the FCC as a required

charge for broadcast

content.”

4. Conclusions: Cable Company-

Imposed Fees Are Less Than

Transparent, and Getting Worse

Several conclusions can be drawn from our analysis

of how the cable industry charges company-

imposed fees. An initial observation is that these

fees represent a growing revenue stream for cable

companies, and because the general practice is

legally permissible, we do not expect the practice

to be abandoned absent government action.

However, charging company-imposed fees is

allowed only if done so in a transparent manner.

That is, the fees must be clearly disclosed during

the buying process to prevent consumer harm that

is often the result of confusion or disinformation.

Though the cable companies assert that their

billing practices are fully transparent, we conclude

that the transparency justiﬁcation fails in at least

three important ways.

Furthermore, company-imposed fees charged by

cable companies are growing in both number and

size.

4.1 Company-Imposed Fees Consistently

Fail Transparency Tests

Information About Fees Is Frequently

Inaccurate

Fees are not transparent if the information

provided about them—what the fees are for and

why the fees are being charged—is inaccurate.

We encountered numerous inaccuracies and

misrepresentations of company-imposed fees

during our research that severely weaken the cable

industry’s transparency claims.

First and foremost, we conclude that providers

seldom acknowledge that company-imposed fees

are in fact imposed at the discretion of the cable

companies and, further, that they frequently state

or suggest the exact opposite: that the company

has no choice but to charge these fees.

Though

in some cases the companies that responded to

our request for information last year acknowledged

to CR the true nature of company-imposed fees,

our secret-shopper and consumer-led research

demonstrates that consumers are not getting the

same information—at least not consistently.

Second, some cable companies inaccurately tell

consumers that certain company-imposed fees,

including the Broadcast TV Fee, are required by the

government. Our secret shopper work revealed this

even before the Minnesota attorney general ﬁled a

lawsuit alleging that against Comcast. Months later,

our consumer-led research directed at Charter

uncovered similar inaccuracies. Company-imposed

fees are not charged by the government, and to tell

consumers otherwise is far from transparent and

could run afoul of the law.

Third, some companies inaccurately lump

company-imposed fees into the same

category with taxes in disclosures and billing

communications. As noted in Section 3.1, for

example, Frontier Communications lists its Internet

Infrastructure Surcharge—a company-imposed

fees—under a “Detail of Taxes and Other Charges”

section of the bill. Similarly, on its website, RCN

includes a description for its Network Access and

Maintenance Fee—another company-imposed

fee—in a table listing a host of other regulatory

pass-through fees and taxes. These placements

inaccurately suggest to consumers that these

company-imposed fees are taxes or regulatory

pass-through fees.

Company-Imposed Fees Are Not Transparent

When Presented in a Confusing Manner

When fees are either confusing or not readily

apparent to consumers, whether they are buried

in the ﬁne print or obscured in some other fashion,

they are not transparent. Our work revealed

instances where consumers were unaware of or

confused about company-imposed fees, even

when disclosed in some manner. In other cases,

consumers simply were not told about fees during

the buying process.

Our secret shopper investigation demonstrated

how dicult it can be to get accurate information,

when signing up for service, about additional fees

that will be added to monthly bills. More often than

not, the whole range of fees—company-imposed

and regulatory pass-throughs and taxes alike—are

not mentioned in detail, or only a few are cited.

Even when our secret shoppers asked about fees,

company-imposed fees like the Broadcast TV Fee

weren’t often mentioned. Properly explaining a

company-imposed fee is certainly not the norm,

and is rather the exception.

A fair conclusion to be drawn from our secret

shopper work is that the majority of customer

service representatives appear to avoid discussing

additional fees with consumers unless directly

asked. And even when they do disclose that there

are additional fees, they sometimes say they’re

mandated by the government rather than admit

they’re imposed by the companies themselves.

The Massachusetts attorney general’s settlement of

its civil investigation of Comcast further suggests

that consumers may not be aware of the cost or

existence of company-imposed fees, even when

those fees are disclosed in the ﬁne print. That

settlement also demonstrated the harm caused

when cable companies permit themselves—

again, in the ﬁne print—to increase company-

imposed fees during a ﬁxed-price promotion.

When surprised and faced with a higher monthly

bill as a result of such a fee increase outside of

the promotion’s terms, some consumers tried to

downgrade or cancel service, only to be slapped

with an early termination fee in excess of $200.

Such is the confusion and harm caused by the

cable industry’s application of the Fee Economy to

its billing practices.

Finally, the sheer number of line-items in today’s

cable bill—our report found an average of 13 in

a typical monthly bill—disguises and eectively

hides from consumers new or increased company-

imposed fees among regulatory pass-through fees

and taxes. Our survey results indicate consumer

anger with the status quo, with nearly two-thirds

(64%) of survey respondents calling add-on fees

they’ve encountered in the industries we asked

about “extremely” or “very” annoying, and nearly

all ﬁnding them at least annoying.

Despite the outrage, cable companies have been

itemizing fees for years and, without meaningful

regulatory or legal changes, will likely continue to

do so in the future.

Even When Transparent, Fees May Confuse

Consumers

Even if fees are transparent and disclosed properly

in a legal manner, more information does not

necessarily lead to smarter consumer decisions.

Recent studies suggest that clearly disclosed

information is only useful if it is provided in time to

be taken into account when making a purchasing

decision; otherwise, extra information might

actually harm decision making.

In 2016, the National Economic Council (NEC)

issued a report, “The Competition Initiative and

Hidden Fees,” which provided an overview of

existing research on the marketplace eects of

hidden fees.

The report noted that these fees,

which are generally structured “to drive down

the perceived price and lure consumers to make

purchasing decisions based on misinformation,”

are, at worst, “fraudulent or deceptive; at a

minimum, they make prices unclear, hinder

eective consumer decision making, and dull the

competitive process.”

The report looked speciﬁcally at the practice

of “drip” or “partitioned” pricing, wherein (as

with cable bills) consumers learn about pricing

components, such as add-on fees, over the course

of the buying process. The NEC concluded that

“some or many consumers do not focus on the

full price, but rather buy on the basis of the lower

price, and are therefore deceived.” In a subsequent

analysis, an economist at the Federal Trade

Commission found that “when price is divided

into a base price and a surcharge, consumers

tend to underestimate the total price, even when

the two components of the price are revealed

simultaneously.”

This research suggests that even when company-

imposed fees are accurately disclosed along

with the base price, if those fees are separated,

consumers will focus on the advertised base price

and give less attention to the total amount, only

to be disappointed later to discover fees have

dramatically increased the ﬁnal price. We cannot

be sure, but perhaps the reason cable companies

choose to use add-on fees is because they are so

eective at diverting consumers’ attention from

the total price and increasing revenue. Sadly, if

these studies are to be believed, we conclude that

no matter how well fees are disclosed, consumers

will continue to be confused and frustrated if those

fees remain separated from the base price.

4.2 The Problem Is Getting Worse

We further conclude that the consumer harm

caused by company-imposed fees is getting worse,

as both the number and cost of fees are increasing.

The Number of Company-Imposed Fees Is

Rising

The number of line-item charges on the average

monthly bill has grown to more than a dozen

in recent years, and the recent appearance of

new mandatory fees suggests that this trend

will continue if unchecked by eective laws or

regulations.

One example: As noted earlier, Frontier and RCN

have begun charging new company-imposed fees

for internet access. Frontier calls it an Internet

Infrastructure Surcharge and RCN calls it a Network

Access and Maintenance fee. Both are mandatory.

With the addition of these new fees, even internet-

only consumers, including so-called cord-cutters,

are unable to avoid add-on fees.

Another example: Consumers used to be able to

avoid an equipment fee by purchasing their own

routers; but Frontier recently began charging a

router fee even to those consumers who use their

own equipment—in eect, adding a new mandatory

fee.

Where does it stop? The FCC opened this

Pandora’s Box more than 25 years ago when it

permitted the itemization of all fees on cable

bills. If a cable company can charge a router fee

even to customers who don’t need a router, or an

Internet Infrastructure Surcharge that purportedly

funds the sort of normal capital investments one

would expect of a modern telecommunications

company, it would appear the sky’s the limit for

new company-imposed fees.

The Cost of Company-Imposed Fees Is

Increasing, Hurting Consumer Pocketbooks

After analyzing hundreds of cable bills, we

discovered that company-imposed fees added

almost a 25% surcharge of the base package price

to a consumer’s monthly bill. In the months after

we requested that consumers share their bills,

several cable companies increased their Broadcast

TV Fees and Regional Sports Fees, among others.

Should this inﬂationary trend continue, we might

expect the mark-up above and beyond the base

price to rise.

These are not inconsequential fee increases. The

2018 settlement the Massachusetts attorney

general brokered with Comcast indicated the

sort of pocketbook harm company-imposed

fees cause consumers. The fact that the attorney

general alleged that thousands of consumers were

deceived by Comcast’s failure to properly disclose

company-imposed fees suggests consumers were

unaware of both the cost and even the existence

of those fees. And when the attorney general

further alleged that fees added up to 40% more to

the advertised price, we can imagine consumers

quickly realized their monthly bill was much much

more expensive than what they had anticipated.

Consumers who couldn’t aord the higher bill

might have wisely decided to either downgrade

and cease service. But, those budget-conscious

consumers were further harmed when they were

charged an exorbitant termination fee to get out of

their ﬁxed-rate promotion.

Unfortunately for consumers, we have no reason

to believe that the increasing costs of company-

imposed fees will slow down anytime soon, if ever.

One of the most alarming facts our work uncovered

was just how quickly these fees have risen in

price, and the ever larger portion they comprise

in a monthly cable bill. We fear that as these fees

become more expensive, and because fees are not

consistently disclosed in a transparent manner, the

harm that company-imposed fees cause consumers

will continue in lock-step.

The weight of the evidence convinces us that the

consumer harm caused by company-imposed

fees must be mitigated. Company-imposed fees

routinely confuse consumers and add a signiﬁcant

cost to monthly bills. The cable industry does this

by taking advantage of a decades-old regulation

that permits the itemization of fees of all kinds.

That legal right has been abused. In the next

section, we make recommendations for reining in

these practices.

5. Policy Recommendations for

Eliminating Company-Imposed

Cable Fees

Policymakers have a range of options to

consider for cleaning the cable marketplace of

excessive company-imposed fees. Consumers are

frustrated, upset and tired of being forced to pay

increasingly expensive and mandatory fees, like the

Broadcast TV Fee. Legislators, regulators, and law

enforcement ocials can and should act to provide

consumers much-needed relief. And consumers

can pursue better purchasing choices in the pay-TV

market that incur fewer fees.

Recommendation #1: Congress Should

Change the Law to Eliminate the Separate

Listing of All Fixed Fees Required for

Service

The surest and most eective way to get rid of

company-imposed fees in cable bills would be for

legislators to eliminate them in order to protect

their constituents. Introduced earlier this year, the

Truth-In-Billing, Remedies, and User Empowerment

over Fees (TRUE Fees) Act would require telecom

providers, including cable companies, to list

a single advertised price inclusive of all fees,

government and company-imposed alike. Only

taxes that vary by locality could be charged

separately. The TRUE Fees Act was written by

Representative Anna Eshoo and Senator Ed Markey

and awaits consideration in the House and Senate.

The legislation is endorsed by Consumer Reports.

The bill would also allow consumers to end their

contract without early termination fees, if the

provider increases fees; prevents arbitrary price

hikes on equipment fees, unless the equipment is

actually improved; and prohibits forced arbitration

clauses for wrongful billing errors.

The TRUE Fees Act is a modest measure that

would inject true transparency into the opaque

billing practices of the cable industry. Fees would

no longer be hidden in the ﬁne print, and the

advertised package price would more accurately

reﬂect what consumers will actually pay each

month.

Recommendation #2: The FCC Should

Eliminate Line-Item Fee Permissibility of

Company-Imposed Fees

The 1992 Cable Act permitted cable operators

to identify certain fees as separate line-items,

which had the practical eect of those fees being

separated from the advertised price.

Section

622(c) of the statute indicates that certain fees can

be itemized, including charges relating to franchise

agreements, as well as “the amount of any other

fee, tax, assessment, or charge of any kind imposed

by any governmental authority on the transaction

between the operator and the subscriber.”

The

FCC was charged with writing the regulations

to implement that law, and the Commission

subsequently made it clear that cable operators

were permitted, but not required, to itemize

government-imposed fees ( identiﬁed as regulatory

pass-through fees in our analysis) in customer bills.

The Cable Act did not expressly limit itemization

of fees to government-imposed costs. Speciﬁcally,

the statute says government-imposed fees may

be itemized, but it did not say that only those fees

may be itemized.

So, when implementing the law

the FCC opened the door to itemization of fees

related to, for example, retransmission consent of

broadcast or regional sports networks, stating:

We understand that the purpose of Section

622(c) is to assure that there are no regulatory

obstacles placed in the way of cable systems

identifying certain governmentally imposed

costs on subscriber bills. System operators are

not required by this provision to undertake

any such itemization, nor does the provision,

by itself, preclude the itemization of additional

costs (whether or not governmentally imposed)

or otherwise mandate that subscriber bills have

any particular format or content.

Speciﬁcally, the FCC stated, in a footnote, that fees

related to copyright and retransmission consent

obligations may be itemized if not prohibited by

law.

We recognize that there will be costs

associated with cable systems complying with

their copyright and retransmission consent

obligations. These may be identiﬁed to

subscribers if that is done in a manner that does

not conﬂict with other provisions of the law (e.g.

prohibited by franchise agreement).

Notwithstanding those statements, and because

the issue is not directly addressed by the statutory

language, the FCC can and should change its

position regarding itemization of company-

imposed fees.

Though the initial deadline for ﬁling a petition for

reconsideration has long since expired, the FCC

retains the authority to suspend, revoke, amend,

or waive regulations, subject to the Administrative

Procedure Act.

This can be done on the FCC’s

own motion or, if “good cause” is shown, on a

petition. And recent Supreme Court decisions

conﬁrm the Commission’s authority to change a

long-standing policy—as long as it recognizes that

it is making a change, ensures that the change is

permissible under the statute, and provides good

reasons for the new policy.

The ﬁndings of this

report provide more than enough good reasons to

justify abolishing company-imposed fees in cable

bills through a new rulemaking proceeding.

Recommendation #3: Overhaul or Evolve

the Retransmission Consent Regime

As explained earlier, cable companies routinely cite

the rising costs of obtaining programming from

broadcasters as the reason they charge company-

imposed fees like the Broadcast TV Fee. Congress

has the authority to right this wrong. An ambitious

approach would overhaul the 1992 Cable Act and

do away with the retransmission consent regime

altogether. Such solutions have been considered

during Congressional hearings, and legislative

proposals have been introduced in the past.

More recently, Representatives Eshoo and Steve

Scalise introduced the Modern Television Act

of 2019 on July 25, 2019. Among other things,

this bill would scrap the current retransmission

consent system in favor of private market

pay-TV operators to obtain programming from

broadcasters and others. The legislation would

also enact new measures to protect consumers for

station blackouts caused by failed negotiations,

and allow for binding arbitration as a way to broker

deals between cable companies and broadcasters

when all else has failed.

Congress must consider bold steps that rid

consumers of a decades-old legal framework that

has resulted in the expensive, mandatory Broadcast

TV Fee, station blackouts, and other consumer

harms. The Modern TV Act proposes an overhaul of

the current retransmission consent regime and the

time is right to at least discuss alternatives to the

status quo.

Short of that, a more modest solution would

improve the present system by adding more

transparency. Currently, retransmission consent

agreements between broadcasters and cable

companies are private and can be kept conﬁdential;

therefore, consumers have no idea what cable

companies are truly paying broadcasters for the

right to carry network programming. Some cable

companies have even claimed that their costs

exceed what they are charging consumers.

But

without seeing these actual contracts, who knows if

this is true or not?

We propose that retransmission consent

agreements should be published at the FCC and

open to public inspection. This is not a new idea.

Alternatively, this data could be sent to the FCC

and the Commission could certify that the fees

subsequently charged to consumers are cost-

based. Then, at the very least, consumers could

be better assured that the steep escalation of

company-imposed fees tied to broadcast and

sports programming is indeed correlated to

increased retransmission consent fees.

Recommendation #4: Enforce the Law

As detailed earlier, state attorneys general can

enforce their states’ consumer protection laws over

cable companies, in particular the ability to police

fraudulent or deceptive trade practices.

The very practice of burying company-imposed

fees in the ﬁne print and failing to include them in

ﬁxed-rate promotions may not be a fair business

practice when consumers experience bill shock.

Allegedly misrepresenting company-imposed fees

by describing them as government fees prompted

the attorney general of Minnesota to ﬁle suit

against Comcast. And placing company-imposed

fees into consumers’ bills without their consent was

found illegal by a judge in Washington State.

We encourage more state attorneys general, as

well as the federal government, to investigate

how company-imposed fees are being charged

and represented by cable companies. The results

of our own secret shopper investigation suggest

a disturbing amount of misrepresentation of

company-imposed fees, and our survey results

conﬁrm consumer frustration with fees in telecom

bills. Furthermore, a reasonable assessment

of the serious allegations leveled against the

cable industry in Massachusetts, Minnesota and

Washington suggests that further investigation is

warranted to determine if similar wrongdoing is

occurring in other states.

Recommendation #5: Cut the Cord

Our ﬁnal recommendations rely upon consumer

action. Cord-cutting describes when a consumer

cancels the video portion of her cable subscription

and retains only internet service. (Some prefer the

term “cord-shaving” because the consumer still

relies on, and pays, the cable company for internet

access service.) Cord-cutting is an eective way to

avoid the majority of company-imposed cable fees

because most are attached to video service. For

example, an internet-only consumer doesn’t pay a

Broadcast TV Fee or a set-top box Rental Fee.

With only an internet connection provided by the

cable company, some cord-cutters use an antenna

to receive free over-the-air broadcast channels.

Other cord-cutters increasingly rely on other

services—loosely called online video distributors

(OVDs)—for video content, delivered via the

internet. Some OVDs like Netﬂix, Amazon Prime

and Hulu deliver content on a subscription basis,

permitting consumers to access whole libraries of

stored content as well as new content exclusive

to the OVD. More recently, OVDs like SlingTV,

PlayStation Vue, DIRECTV Now, YouTube Live,

Fubo, and others oer packages of live streaming

video services that replicate a traditional live

television product. The actual number and types of

channels vary by service, and may not include all

local television channels.

Many if not all of these OVDs are provided

free of company-imposed fees. Any hardware

requirements are a small, one-time investment

versus a recurring set-top box Rental Fee that

averages close to $20 a month according to our bill

analysis. Not surprisingly, OVD service is becoming

increasingly popular with consumers.

Unfortunately, our bill analysis showed that dubious

company-imposed fees are being attached to

stand-alone internet access service, as if the cable

companies are preparing for more cord-cutting

and preemptively slapping the same kinds of add-

on fees on cord-cutters. Bills issued by Frontier

Communications contain an Internet Infrastructure

Surcharge, and RCN bills include a Network Access

and Maintenance Fee. Both fees are mandatory.

Even more preposterous, Frontier is now charging

consumers a $10 a month Router Fee regardless

of whether a consumer actually leases the router

equipment from Frontier.

As such, cord-cutting

is likely a limited and imperfect solution to the

problem of company-imposed fees.

We are also concerned that the repeal of the FCC’s

net neutrality rules in 2018 threatens the future

of these competing OVD services. Because the

incumbent cable company who is losing market

share to OVDs often provides the very internet

access service that connects consumers to them,

it is all-too-easy for anti-competitive mischief to

emerge. Cable companies, who are also internet

service providers, could employ future business

models that favor their competing services

over independent OVDs.

We fear that if such

practices spread, competition would be stiﬂed, and

consumer choice reduced if OVDs are forced out of

the market.

Recommendation #6: Negotiate

Finally, our last recommendation is old-fashioned,

but sometimes eective: negotiate with the cable

company. We learned from our consumer-led

research, where nearly 300 Charter consumers

contacted the company to complain about a

second increase of the Broadcast TV Surcharge

in just three months, that CSRs will occasionally

cut a deal with consumers. Of the 285 consumers

who contacted Charter, 19 were either given a fee

waiver or credit, advice on how to cut costs (either

by downgrading services or reducing the number

of set-top boxes), a free channel or two, or enrolled

in a new promotional package that eectively

reduced the monthly price.

Unfortunately, the overwhelming response given to

consumers was negative, that no bargains or fee

credits were to be had, even when directly asked

whether or not the fee could be waived or if the

fee was negotiable. Because of this, we can only

suggest negotiation as a solution to runaway fees

with reservation—consumers are more likely than

not to be refused any help by CSRs.

APPENDIX A: Methodology for

the “What the Fee?!” Campaign

CR Cable Bill Report

The What the Fee?! Campaign analyzed data

derived from actual cable bills collected from

volunteers from Consumer Reports’ activist list

between June and August of 2018 (only one

month’s bill from each volunteer). We extracted

itemized fee names and their respective amounts

included within the total cable bill cost, as well

as the customer’s name, general location, the

company through which the customer receives

the cable service, whether the service is Satellite

or Non-Satellite, and what type of package the

customer has with the company (e.g. internet

service only, TV + internet + phone bundle, etc.).

The fee information was categorized into six

main fee categories: company-imposed fee(s),

government fees & taxes, package fee, premium

service fee(s), miscellaneous fee(s), and discounts.

Within each fee category are several more

descriptive fee types (e.g. within company-imposed

fee(s), there are fee types such as broadcast and

cable modem fees that itemized fees fall under).

To make the table Non-Satellite TV Customer Cable

Bills 2019, we extracted and used only the data

from non-satellite TV service customers, providing

information from 787 bills. From these bills, we

counted the total number of fees that fell into one

of the six fee categories. We also counted the total

number of fees that fell into one of the several fee

types within each category. From these counts

we calculated the percentage of people who were

aected by each fee type by dividing the fee type

count by the total number of bills. The minimum,

maximum, and average values for each fee type

over all of the bills were also calculated. We also

made similar tables that were company speciﬁc;

we counted the total number of bills from each

company, then counted the number of fees that fell

into each fee type. The percentages of customers

aected by the fees within each company were

calculated by dividing the fee type counts by the

total number of bills from each company.

The pie charts for Non-Satellite TV Customers

used the same 787 bills as previously stated. We

calculated the average cost a consumer would pay

a month for their cable bill by ﬁnding the mean

monthly cost of all of the 787 bills without the

discounts (by adding the discount totals to the

discounted bill of each applicable consumer). We

also found the average cost of each of the ﬁve

remaining fee categories from all 787 bills. The

percentages in the pie chart for each fee category

were calculated by dividing the average cost of

the fee categories each by the average total cost a

consumer would pay a month for their cable bill.

APPENDIX B: CR Letters to Pay-TV CEOs and Responses

On May 18, 2018, Consumer Reports sent letters to 11 leading pay-TV companies to raise our concern about

company-imposed fees and the confusion they cause consumers.

Letters were sent to: AT&T, Altice USA,

CenturyLink, Charter Communications, Comcast Corporation, Cox Communications, DIRECTV, Dish Network,

Frontier Communications, Verizon Communications, and RCN.

Attached below is a copy of the letter sent to Comcast. The text of the other 10 letters was the same.

Consumer Reports received written responses from Charter, Comcast, and Verizon. They are attached here

for review. Frontier replied to us via telephone, and scheduled a conference call to discuss their response to

our letter. The other seven companies did not respond.

Catherine Bohigian

Executive Vice President

Government Affairs

August 17, 2018

Mr. Jonathan Schwantes

Senior Policy Counsel

Consumers Union, Advocacy Division of Consumer Reports

1101 17

Street, NW Suite 500

Washington, D.C. 20036

Dear Mr. Schwantes:

I am writing in response to your May 18, 2018 letter, regarding Charter’s disclosure of certain

fees to its video customers. Charter’s long-standing practice has been to provide customers with

simplified service packages and bills that are transparent about additional charges. In fact, Charter has

been an industry leader in limiting the number of additional fees that are included on consumers' bills.

Although your letter focuses on a narrow set of common fees for video services, we believe it

would be useful to provide a comprehensive overview of Charter’s customer-friendly business practices,

which the company has also been rolling out in former Time Warner Cable and Bright House Networks

territories since the merger in 2016. Charter’s approach is to offer simple, uniform pricing for its suite of

services across our service area. As a result, Charter's pricing has provided customers with simplicity

and the confidence of knowing that the same low pricing is offered wherever that customer may be

located across Charter's footprint. Moreover, we do not impose early termination fees on any of our

services. Consumers can terminate service at any time with no penalty, including all customers in

former Time Warner Cable and Bright House Networks markets. With regard to our broadband service,

Charter has taken significant steps to provide clear and simple pricing for our internet services by

offering uniform pricing across our service area without any data caps, usage-based pricing, or modem

fees. Charter also does not impose other separate additional fees on our voice services that are

common in the industry such as federal Universal Service (USF) fees, state USF fees, subscriber line fees

and E911 fees.

With regard to our video service, Charter has also taken a pro-consumer approach based on

simplicity and transparency. Charter's most widely purchased video service, Spectrum TV, does not

have a stand-alone fee for regional sports networks. While all of Charter’s customers are eligible to

subscribe to Spectrum TV at any time, some customers, particularly in former Time Warner Cable and

Bright House Networks service markets, have chosen to keep grandfathered video packages, which may

include a Regional Sports Fee depending upon the package. However, the number of customers with

grandfathered packages continues to shrink as more and more customers in these markets are making

the transition to Charter's uniform pricing plans.

These broadband and voice fees continue to apply to certain legacy packages where the customer has not yet upgraded to our

current service offerings. That number continues to decline as more customers transition away from the legacy packages.

Catherine Bohigian

Executive Vice President

Government Affairs

Charter believes that it is also important for consumers to understand the factors that

contribute to increases in their cable rates, but are outside of Charter’s control. Under federal law,

cable providers must obtain “consent” to carry local television broadcast signals. These local TV signals

were historically made available at no cost or low cost. However, in recent years the prices demanded

by local broadcast TV stations for retransmission consent have increased dramatically. In 2008,

broadcast stations collected slightly more than $500 million in retransmission consent fees.

According

to SNL Kagan, gross retransmission consent fees are expected to rise 8.9% in 2018 to $10.23 billion, from

$9.42 billion in 2017, and to $12.82 billion by 2023.

We have therefore elected to identify these costs

separately in the form of an itemized Broadcast TV Surcharge.

The FCC expressly permits cable video

programming providers to separately itemize their programming costs on customer bills and other

carriers have broken out these costs in a similar way.

Whether signing up for Charter's services online or by phone, Charter discloses that monthly

rates may be subject to fees and surcharges. For example, when ordering online, offers include

language explaining that other fees and surcharges may apply. Charter discloses additional details

about these fees and surcharges, including the exact amount of the Broadcast TV Surcharge, through a

hyperlink made available on our website. Once the customer provides Charter with a location and

selects a package, she or he is taken to a shopping cart, where Charter prominently displays the initial

order total and the ongoing monthly charge for service, with a disclosure that additional fees and

surcharges, including a broadcast fee may apply. The vast majority of the markets we serve already

include an express reference to the Broadcast TV Surcharge during the online ordering process and the

remaining markets are in the process of being updated.

As such, customers are providing their affirmative consent to all of the charges, including fees

and surcharges, associated with their order before they incur any costs. Customers who order service

over the phone are similarly provided with a complete list of services ordered and an “all-in” price

before the order is completed.

See Lacey Rose, The Retransmission War, Forbes (Dec. 30, 2009), https://www.forbes.com/2009/12/30/time-warner-cable-

business-entertainment-fox-retransmission.html#6dbcd4bc66fc.

See Mary Collins, Forecasting the Future for Retrans Revenue, TVNewsCheck (May 11, 2018),

https://tvnewscheck.com/article/113507/forecasting-the-future-for-retrans-revenue/.

Charter is not alone in charging a Broadcast TV Surcharge. Others in the multi-video programming distribution industry, including

AT&T U-Verse, DirecTV, Verizon FiOS and Comcast, have implemented similar fees to account for rising retransmission consent

costs.

See In re Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992; Rate

Regulation, Report and Order and Further Notice of Proposed Rulemaking, 8 FCC Rcd. 5631 ¶ 547 & n.1402 (1993)

(“recogniz[ing] that there will be costs associated with cable systems complying with their copyright and retransmission consent

obligations,” and stating that such costs can be separately itemized and “identified to subscribers if that is done in a manner

that does not conflict with other provisions of the law (e.g. prohibited by a franchise agreement)”).

Catherine Bohigian

Executive Vice President

Government Affairs

Once an order is completed, Charter sends an email to the customer confirming the total

monthly cost of service, including the Broadcast TV Surcharge and estimated taxes and fees.

Additionally, if a customer subsequently decides to terminate service for any reason, as explained

above, Charter allows all customers to cancel service at any time without incurring a penalty.

Finally, on the customer bill itself, Charter is careful to include the Broadcast TV Surcharge in a

section that is separate from the fees associated with government-mandated taxes and fees. This

approach complies with all applicable laws and regulations, and furthers transparency by preventing

customer confusion between additional charges, such as the Broadcast TV Surcharge, and government-

mandated fees.

I hope that this information is helpful to your inquiry. Please do not hesitate to contact me if

you have any questions.

Sincerely,

Catherine Bohigian

Executive Vice President, Government Affairs

Charter Communications

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References

1. Introduction

1. Pay-TV providers for our purposes are multi-channel video programming distributors (MVPDs) which include cable companies,

direct broadcast satellite (DBS) providers, and telephone companies that provide video and internet service (e.g, Verizon Fios

or AT&T’s U-Verse). Over-the-top (OTT) or online video distributors (OVD) are not included in our pay-TV deﬁnition. Consumer

Reports’ annual telecom survey ratings can be found at: James Wilcox, People Still Don’t Like Their Cable Companies, CR’s Latest

Telecom Survey Finds, Consumer Reports (August 8, 2018) https://www.consumerreports.org/phone-tv-internet-bundles/people-

still-dont-like-their-cable-companies-telecom-survey/.

2. Meredith Whipple, Why is America Overpaying for Cable?, Public Knowledge (Feb. 16, 2018), https://www.publicknowledge.org/

news-blog/blogs/why-is-america-overpaying-for-cable.

3. WTFee?! Survey, 2018 Nationally-Representative Multi-Mode Survey, Prepared by the Consumer Reports Survey Research

Department (January 3, 2019) (hereafter CR WTF?! Survey) available at: https://advocacy.consumerreports.org/research/

wtfeesurvey/.

4. Id. at p. 6; See also Assurance of Discontinuance, In the Matter of Comcast Cable Comm’ns LLC, No. 18-3514 (Mass. Super. Ct. Nov. 9,

2018).

2. Understanding the Monthly Cable Bill

5. Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106 Stat. 1460, 1490 (1992) (hereafter

Cable Act).

6. FCC Report, Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming (Eighteenth

Report), Media Bureau (January 17, 2017), at ¶ 49; available at https://apps.fcc.gov/edocs_public/attachmatch/DA-17-71A1_Rcd.pd.

7. Id.

8. Karl Bode, Charter Starts Charging ‘Broadcast TV Surcharge’ So They Can Raise Rates, But Leave the Advertised Price the Same,

DSLReports (Sep. 13, 2010), http://www.dslreports.com/shownews/Charter-Starts-Charging-Broadcast-TV-Surcharge-110316.

9. Jon Brodkin, Charter Raises Sneaky ‘Broadcast TV’ Fee for Second Time In Four Months, ArsTechnica (Feb. 6, 2019), https://

arstechnica.com/information-technology/2019/02/charter-raises-sneaky-broadcast-tv-fee-for-second-time-in-four-months/; see

also Press Release, Spectrum Hikes Broadcast Fee by 20% Just Months After Previous Fee Increase, Consumer Reports (Feb. 5,

2019), https://advocacy.consumerreports.org/press_release/spectrum-hikes-broadcast-fee-by-20-just-months-after-previous-fee-

increase/.

10. Luke Bouma, Spectrum is Raising its TV & Internet Pricing (The Third Price Hike on Broadcast TV in 12 Months), Cord Cutter News

(Sep. 7, 2019), https://www.cordcuttersnews.com/spectrum-is-raising-its-tv-internet-pricing-including-the-3rd-price-hike-on-

broadcast-tv-in-12-months/.

11. Phillip Dampier, Charter Shareholders Love Spectrum’s 20 percent Broadcast TV Increase; Second Rate Hike in 4 Months, Stop

the Cap! (Feb. 14, 2019), https://stopthecap.com/2019/02/14/charter-shareholders-love-spectrums-20-broadcast-tv-fee-increase-

second-rate-hike-in-4-months/.

12. Descriptions of these fees were sourced from company explanations of them found on their websites. Examples of these

explanations can be found online for Comcast at https://www.xﬁnity.com/support/articles/most-common-taxes-fees-surcharges-

on-your-bill, for Charter at https://www.spectrum.net/support/manage-account/understanding-your-bill-taxes-and-fees, for Verizon

Fios at https://www.verizon.com/support/residential/account/understand-bill/billing-glossary, and for Frontier at https://frontier.

com/helpcenter/categories/billing/read-and-pay-my-bill/understand-my-bill-residential. See also FCC Report, Annual Assessment

of the Status of Competition in the Market for the Delivery of Video Programming (Eighteenth Report), Media Bureau (January 17,

2017), at ¶ 49; available at https://apps.fcc.gov/edocs_public/attachmatch/DA-17-71A1_Rcd.pd.

13. Fees for renting a set-top box, often equipped with digital video recorder (DVR) capability, and related equipment are some of the

oldest company-imposed fees. Over decades, consumers have grown accustomed to being made to “lease” a set-top box in order

to receive cable video service. Congress recognized this as a problem and included language in the 1996 Telecommunications Act

directing the FCC to open the set-top box market to competition, with the goal of freeing consumers from paying set-top box fees

in perpetuity, often covering the cable company’s equipment costs many times over. See 47 U.S.C. § 549 (codifying section 629 of

the Telecommunications Act of 1996.) The FCC has tried on more than one occasion and as recently as 2016 to meet its obligations

to subject this market to meaningful competition. See Tom Wheeler, Op-Ed: FCC Chairman: Here Are the New Proposed Rules

for Set-Top Boxes, Los Angeles Times (Sep. 8. 2016), https://www.latimes.com/opinion/op-ed/la-oe-wheeler-set-top-box-rules-

20160908-snap-story.html. Unfortunately, those eorts have come up short, and consumers continue to pay set-top box rental

fees. Consumer Reports has long supported eorts to get rid of or at least oer alternatives to the legacy set-top box, but the

status quo remains unchanged in many markets.

14. Because most cable companies also oer broadband internet access service, they rent cable modems and wireless routers

necessary for installing a home WiFi network. A cable modem rental fee is similar to a set-top box fee in that consumers can end

up repeatedly paying for the full cost of the “rented” equipment. Fortunately for consumers, however, a competitive market for

cable modems and routers exists, and cable companies are required to allow interconnection of these independent devices to their

networks. Consumers can usually avoid this fee by purchasing their own cable modems. However, we have learned that at least one

provider, Frontier Communications, has begun charging its customers a $10 Router Fee, even if they use their own modems. See

https://frontier.com/helpcenter/categories/internet/installation-setup/compatible-routers-and-modems.

15. Cable Act, Pub. L. No. 102-385, 106 Stat. 1460, 1490 (1992).

3. Analysis

16. We included bills from telephone providers (e.g., Verizon Fios, AT&T U-Verse, and Frontier Communications) in this category;

although they are technically not cable companies, they are MVPDs and we considered their service oerings and billing practices

as functional equivalents.

17. Bundle discounts appeared in just a little more than half of the bills we analyzed. Other discounts appeared as “internet” or “add-

on” discounts for presumably a similar sort of promotional pricing. More infrequently, discounts appeared as recurring “credits” that

could be extended to consumers who, for example, use their own cable modem or router. Also, a recent CR member survey found

when consumers tried to negotiate a better deal with their cable company, the overwhelming majority—76%—succeeded in getting

a discount or other perk. (See James Wilcox, Cord Cutting Continues, Fueled By High Cable Pricing, Consumer Reports Study Finds,

Consumer Reports (September 17, 2019), https://www.consumerreports.org/telecom-services/cord-cutting-continues-high-cable-

pricing/. Presumably, the rare “fee discount” we discovered—it appeared in less than 3% of the bills studied for this report—might

represent a waived fee as a result of cutting a better deal. For a further discussion of discounts as a pricing strategy, see FCC

Report, Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming (Eighteenth Report),

Media Bureau (January 17, 2017), at ¶ 45-46, 51-52; available at https://apps.fcc.gov/edocs_public/attachmatch/DA-17-71A1_Rcd.pd.

18. Because premium services are optional, their cost was excluded.

19. FCC Report, Communications Marketplace Report (Dec. 26, 2018), at ¶ 53; see Fig. B-1. Available at https://docs.fcc.gov/public/

attachments/FCC-18-181A1.pdf.

20. A more detailed breakdown of the math is as follows: From the 2018 FCC Communications Marketplace Report, we took the

following 2017 MVPD subscriber numbers: 51,859,000 cable + 10,626,000 telephone = 62,485,000 subscribers. We then multiplied

that number (62,485,000) times the average monthly cost of company-imposed fees across all 787 cable bills we analyzed ($37.11)

for a total of $2,318,818,350. Further multiplying that number ($2,318,818,350) by 12 months equaled $27,825,820,200 a year in

company-imposed fees charged, as an average, by the cable industry.

21. Jon Brodkin, Comcast Raises Cable TV Bills Again - Even if You’re Under Contract, ArsTechnica (Nov. 26, 2018), https://arstechnica.

com/tech-policy/2018/11/comcasts-controversial-tv-and-sports-fees-rise-again-hit-18-25-a-month/.

22. Phillip Swan, DIRECTV, U-verse Raising Prices in January 2019, The TV Answer Man (Dec. 17, 2018), https://tvanswerman.

com/2018/12/17/directv-u-verse-raising-prices-in-january-2019/.

23. Jon Brodkin, Charter Raises Sneaky ‘Broadcast TV’ Fee for Second Time In Four Months, ArsTechnica (Feb. 6, 2019), https://

arstechnica.com/information-technology/2019/02/charter-raises-sneaky-broadcast-tv-fee-for-second-time-in-four-months/. See

also Luke Bouma, Spectrum is Raising Its TV & Internet Pricing (The Third Price Hike on Broadcast TV in 12 Months), Cord Cutter

News (Sep. 7, 2019), https://www.cordcuttersnews.com/spectrum-is-raising-its-tv-internet-pricing-including-the-3rd-price-hike-on-

broadcast-tv-in-12-months/.

24. Karl Bode, Charter Starts Charging ‘Broadcast TV Surcharge’ So They Can Raise Rates, But Leave the Advertised Price the Same,

DSLReports (Sep. 13, 2010), http://www.dslreports.com/shownews/Charter-Starts-Charging-Broadcast-TV-Surcharge-110316.

25. FCC Report, Communications Marketplace Report, (Dec. 26, 2018), at ¶ 53; see Fig. B-1. Available at https://docs.fcc.gov/public/

attachments/FCC-18-181A1.pdf.

26. Luke Bouma, Comcast Is Raising Their Modem Rental Fee (The Good News Is You Don’t Have to Pay It), Cord Cutters News (Nov. 27,

2018), https://www.cordcuttersnews.com/comcast-is-raising-their-modem-rental-fee-the-good-news-is-you-dont-have-to-pay-it/.

27. Jon Brodkin, Frontier Customer Bought His Own Router—But Has to Pay $10 Rental Fee Anyway, ArsTechnica (July 2, 2019), https://

arstechnica.com/information-technology/2019/07/frontier-customer-bought-his-own-router-but-has-to-pay-10-rental-fee-anyway/.

See also https://frontier.com/helpcenter/categories/internet/installation-setup/compatible-routers-and-modems for Frontier’s

explanation of its mandatory router fee: “Frontier charges you a monthly lease fee for your Frontier router or modem—whether you

use it or not.”

28. Gerry Smith, Comcast, Dish, AT&T to Raise TV Prices to Counter Cord-Cutting, Bloomberg (Jan. 4, 2019), https://www.bloomberg.

com/news/articles/2019-01-04/comcast-at-t-raise-prices-to-counter-cord-cutting-higher-costs.

29. For RCN’s online explanation of “Understanding Taxes” see https://www.rcn.com/hub/help/understanding-taxes/dc-taxes; for

Frontier’s explanation of “Taxes and Surcharges” see https://frontier.com/helpcenter/categories/billing/read-and-pay-my-bill/

understand-my-bill-residential/bill-sections/taxes-and-surcharges.

30. See Appendix A for a copy of the CR letter sent to Comcast as an example.

31. Letter from Lynn R. Charytan, EVP General Counsel, Comcast Cable and SVP Senior Deputy General Counsel, Comcast Corporation,

to Jonathan Schwantes, Senior Policy Counsel, Consumer Reports (June 20, 2018) (hereafter Comcast Reply; see copy in Appendix

B). Letter from Catherine Bohigian, Executive Vice President Government Aairs, Charter Communications, to Jonathan Schwantes,

Senior Policy Counsel, Consumer Reports (August 17, 2018) (hereafter Charter Reply; see copy in Appendix B); Letter from John

Culina, Vice President and Deputy General Counsel, Verizon, to Jonathan Schwantes, Senior Policy Counsel, Consumer Reports

(June 22, 2018) (hereafter Verizon Reply; see copy in Appendix B). Note that Frontier Communications responded via telephone.

32. Charter Reply (citing In re Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992:

Rate Regulation, Report and Order and Further Notice of Proposed Rulemaking, 8 FCC Rcd. 5631 § 547 n. 1402 (1993)).

33. Comcast Reply.

34. Cable Act, Pub. L. No. 102-385, 106 Stat. 1460, 1490 (1992).

35. For a survey of state consumer protection statutes, also known as “little FTC acts” see Carolyn L. Carter, Consumer Protection

in the States (A 50-State Report on Unfair and Deceptive Acts and Practices Statutes), National Consumer Law Center (Feb.

2009), https://www.nclc.org/images/pdf/udap/report_50_states.pdf. See also Christine Lipsey and Dylan Tuggle, Little FTC Acts

and Statutory Treble Damages-Traps for the Unwary, American Bar Association (2017), https://apps.americanbar.org/litigation/

committees/businesstorts/articles/1109_lipsey.html.

36. Verizon Reply.

37. Comcast Reply. See also Charter Reply.

38. Comcast Reply. (Comcast wrote: “the costs to carry regional sports programming and broadcast television have been going up

dramatically, and we defray the increased costs.”)

39. Cable Act, Pub. L. No. 102-385, 106 Stat. 1460, 1471 (1992)

40. Id. at 1482.

41. Karl Bode, Those Annoying Cable Channel Blackouts Are Only Going to Get Worse in 2018, TechDirt (Jan. 8, 2018), https://www.

techdirt.com/articles/20180102/12243238911/those-annoying-cable-channel-blackouts-are-only-going-to-get-worse-2018.shtml

(citing to a letter to lawmakers from Dish Network).

42. Assurance of Discontinuance, In the Matter of Comcast Cable Comm’ns LLC, No. 18-3514 (Mass. Super. Ct. Nov. 9, 2018), (hereafter

Mass. Settlement). See also Massachusetts Consumer Protection Act, G.L. c. 93A § 2.

43. Mass. Settlement at 3.

44. Id.

45. Mass. Settlement at 6.

46. Id.

47. Mass. Settlement at 9.

48. Mass. Settlement at 11.

49. Mass. Settlement at 12.

50. State of Minnesota v. Comcast Cable Comm., LLC, No. 27-CV-18-20552 (Hennepin Cty. D. Ct. Dec. 21, 2018), (hereafter Minn. Compl.).

51. Minn. Compl. at 10.

52. Minn. Compl. at 9.

53. Minn. Compl. at 20. See also Minn. Compl. at 16, where Minnesota cites internal Comcast reports that have been redacted for public

viewing.

54. Minn. Compl. at 20.

55. Minn. Compl. at 28.

56. Minn. Stat. 325F.68-.694; Minn. Stat 325D.42-.48.

57. Compl., State v. Comcast Corp., No. 16-2-18224-1 SEA (King’s Cty. Sup. Ct. Aug. 1, 2016), (hereafter Wash. Compl.).

58. State of Washington v. Comcast Communications Management, Superior Court of Washington (June 6, 2019), https://agportal-

s3bucket.s3.amazonaws.com/uploadedﬁles/Another/News/Press_Releases/ComcastRuling.pdf.

4. Conclusions: Cable Company-Imposed Fees Are Less Than Transparent, and Getting

Worse

59. Charter’s disclosure uses this language in its explanation of the Broadcast TV Surcharge found online: “As a direct result of local

broadcast or “network-aliated” TV stations in recent years dramatically increasing the rates to Charter Communications to

distribute their signals to our customers, we’re forced to pass those charges on as a ‘Broadcast TV Surcharge.’” See https://www.

spectrum.net/support/my-account/broadcast-tv-surcharge/.

60. CR WTF?! Survey, available at: https://advocacy.consumerreports.org/research/wtfeesurvey/.

61. National Economic Council, The Competition Initiative and Hidden Fees (Dec. 2016), https://obamawhitehouse.archives.gov/sites/

whitehouse.gov/ﬁles/documents/hiddenfeesreport_12282016.pdf.

5. Policy Recommendations for Eliminating Company-Imposed Cable Fees

62. TRUE Fees Act of 2018, H.R. 6987, 115th Cong. (2018). Eshoo, Markey Introduce Legislation to Crack Down on Surprise Telephone,

Cable, and Internet Fees (Feb. 14, 2019), https://eshoo.house.gov/news-stories/press-releases/eshoo-markey-introduce-legislation-

to-crack-down-on-surprise-telephone-cable-and-internet-fees/.

63. Cable Act, Pub. L. No. 102-385 § 14, 106 Stat. 1460, 1489 (1992) (codiﬁed as amended at 47 U.S.C. § 542(c)). “Section 622(c) of the

Communications Act of 1934 (47 U.S.C. 542(c)) is amended to read as follows: ‘(c) Each cable operator may identify, consistent

with the regulations prescribed by the Commission pursuant to section 623, as a separate line-item on each regular bill of each

subscriber…’”

64. Cable Act, Pub. L. No. 102-385 § 14, 106 Stat. 1460, 1490 (1992).

65. Id.

66. 8 FCC Rcd. at 5967 (emphasis added).

67. Id. at 5969 n.1402 (emphasis added). Id. at 5967-5969, 5971-5972; H. Rep. No. 102-628, at 86 (1992); H.R. Rep. No. 102-862, at 84

(1992). For example, the reports detail whether the government-imposed costs can be itemized as separate fees beyond the total

amount a cable operator charges for service. H. Rep. No. 102-628, at 86 (1992).

68. 47 C.F.R. § 1.3 (2017).

69. 47 C.F.R. § 1.3 (2017); See also FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009). For conditions, see 514-15.

70. James K. Willcox, Cable TV Fees Continue to Climb, Consumer Reports (Feb. 21, 2019), https://www.consumerreports.org/tv-

service/cable-tv-fees/ (Citing an Altice spokesperson who said “We are also impacted by increasing fees charged by broadcasters

and programmers, of which we pass along just a fraction of the rising costs to our consumers.”)

71. Press Release, Sunlight Needed To Expose Broadcasters’ Private Price-Fixing Schemes, Trade Group Says, American Cable

Association (Dec. 27, 2011), https://www.americancable.org/aca-calls-on-fcc-to-require-greater-transparency-from-tv-stations-that-

coordinate-retransmission-consent-negotiations/.

72. Jim Elayan & Abraham Thengugal, Will the Second Wave of Online Video Distribution Services Drown Out U.S. Pay TV? Cognizant

20-20 Insights (Apr. 2015), https://www.cognizant.com/InsightsWhitepapers/will-the-second-wave-of-online-video-distribution-

services-drown-out-us-pay-tv-codex1317.pdf.

73. Jon Brodkin, Frontier Customer Bought His Own Router—But Has to Pay $10 Rental Fee Anyway, Ars Technica (July 2, 2019),

https://arstechnica.com/information-technology/2019/07/frontier-customer-bought-his-own-router-but-has-to-pay-10-rental-fee-

anyway/.

74. Karl Bode, How the New AT&T Could Bully It’s Way To Streaming Domination, The Verge (Dec. 18, 2018), https://www.theverge.

com/2018/12/18/18146186/att-time-warner-streaming-video-net-neutrality.

Appendices

75. At the time the letters were sent, our advocacy work operated under the name Consumers Union. In November of 2018, Consumers

Union ocially moved under the Consumer Reports (CR) banner. We were founded as the Consumers Union of America in

1936 and became known by millions of Americans for our award-winning magazine Consumer Reports. Consumer Reports is an

organization with more than six million members that advocates for a fair, safe, and transparent marketplace, fueled by our trusted

research, journalism, and insights. We believe this integration of our advocacy work under the CR name will communicate the

depth and breadth of our mission and values, and will help us make an even greater impact to advance the issues that matter to

consumers and the world.